If you need a coffee to kickstart (or survive) your day, your options for where to get your fix, and what kind of bean-based beverage to choose, are almost limitless. But even with the rise of the local-in-feel, artisanal "third-wave" shops, amped-up efforts by fast food outlets like McDonald's and the proliferation of environmentally dubious single-serve machines, there is still a good chance you grab your brew at either Dunkin’ Donuts or Starbucks. The two players, which control well over half the coffee market in the U.S., are battling an ever-growing field of competitors, but ultimately they are the Red Sox and Yankees of coffee places (you know, if the Yankees were from Seattle). And it may seem like an innocent thing to do, but you are picking a side every time you buy a Coolatta or a Frappuccino.
It wasn’t always quite so competitive between the brands. Dunkin’ Donuts and Starbucks co-existed for years back when Dunkin’ really was all about the donuts. But Fred the Baker, star of the brand's famous "Time to make the donuts" ads, retired in the late 1990s, and Dunkin’ Donuts started putting more emphasis on growing its coffee business, introducing the Dunkaccino in 2000 and then bringing on a whole "espresso revolution"—as the brand describes it in press materials—in 2003 with a new line of espressos, lattes and cappuccinos.
Dunkin’ Donuts was slowly but surely creeping into fancy coffee drinks territory, and in 2006, declared its intention to go head-to-head with Starbucks, cheekily poking fun at its relatively upscale competitor via a commercial that found coffee drinkers struggling to order their brew from a menu that appeared to be written in "Fritalian." Remember this ad?
(Starbucks never directly retaliated for that humorous attack, though the brand certainly does like to insist that its beans are way better than the kind served at fast food joints). That same year, DD launched the coffee-centric "America Runs On Dunkin'" campaign. If it wasn't clear enough, in 2013, Dunkin' CFO Paul Carbone said "We are a beverage company," and called coffee and related drinks the "holy grail" of business success.
What's especially interesting about this long-brewing rivalry, is how differently Dunkin’ Donuts and Starbucks have approached the act of marketing themselves. Yes, the two companies have two very distinct brand identities—the average Joe brand with its friendly pink and orange logo vs the more upscale-seeming west coast player with its fancy names and second-office-of-screenwriters rep. But each of the coffee giants was also built on a distinct ad philosophy—one a more word-of-mouth-driven, holistic brand and one a more classic "advertiser" that's been adapting for a changed market. Yet still more interesting, both approaches have proved very effective in the long term. While each faces ongoing challenges, both companies continue to grow and remain relevant. Both reported positive results at the end of 2013—Dunkin's profit and same store sales increased 36% and 3.4%, respectively. For Starbucks, the increases were 34% and 7%.
Here, we take a look at the history of the brands, their marketing M.O.s and run down some of each brand's signature marketing moves.
While the brands appear to be worlds apart, they do have some things in common. Both began as regional brands, with Dunkin’ Donuts starting in 1950 in the Northeast and Starbucks launching in 1971 in the Northwest, and both built a devoted following among locals before expanding their empires across the United States and all around the globe. Japan was the first international stop for both—Dunkin’ Donuts opened its Tokyo outpost in 1970 and Starbucks followed in 1996.
Dunkin’ Donuts now has nearly 11,000 restaurants in 33 countries (about 7,000 in the U.S.). Starbucks has 20,000 retail stores in 65 countries (11,000 of them in the U.S.). Between them, the two companies own around 60% of the country's coffee market—with Starbucks controlling an estimated 36% and DD roughly 24%.
Dunkin’ Donuts reports that it sells 1.8 billion cups of coffee annually. Starbucks chooses not to share how many cups of coffee it sells a year. Though not directly comparable, this figure is of note: according to a press release the brand issued on its recycling efforts, Starbucks beverages account for approximately 4 billion cups globally each year.
John Costello, who spent 30 years at Procter & Gamble, became global chief marketing and innovation officer at Dunkin’ Donuts in 2009. Sharon Rothstein, formerly of Sephora, was named global chief marketing officer of Starbucks in 2013.
While born in 1971, Starbucks could be seen as belonging to the club of whole-experience brands exemplified by companies that launched or came of age after the digital revolution—think Google and Zappos. These are companies known for product, customer service, overall ethos and voice, and whose brands aren't heavily associated with advertising. As a brand built more on a word-of-mouth approach, your Starbucks associations are more likely tied to its staff, its stores, and its products than its ads. Starbucks did and does advertise of course—the brand has increased its measured media spend at various points over the last several years—but the company didn't run its first national TV campaign until 2007, during a period of slowing sales and a soft economy. Perhaps indicative of Starbucks's and CEO Howard Schultz's approach, the company has, over its history, been seen as a "difficult" client for ad agencies—former agency Wieden + Kennedy stepped away from the business in 2008 and other ad execs who have worked with the brand have expressed frustration about the company's philosophy and process of making ads. Schultz was a guy, after all who said, 10 years before running that national ad campaign, "By its very nature, national advertising fuels fears about ubiquity."
Starbucks has, so far successfully, focused on creating a connection between customers and the brand through in-store experiences—music is a biggie and has been since the mid-1990s—and interactions with employees: Starbucks’s baristas don’t just serve coffee, they are trained brand ambassadors. In a Fast Company story about Starbucks's $35 million Leadership Lab, writer Sarah Kessler pulled this nugget of wisdom from Starbucks chairman Howard Schultz's book Onward: "[Employees] are the true ambassadors of our brand, the real merchants of romance and theater, and as such the primary catalysts for delighting customers. Give them reasons to believe in their work and that they're part of a larger mission, the theory goes, and they’ll in turn personally elevate the experience for each customer—something you can hardly accomplish with a billboard or a 30-second spot."
The result was that Starbucks became a cultural presence that transcended coffee. "As a marketer, Starbucks is a cultural crusader that has been extremely successful at creating a lifestyle brand," says Jonah Disend, founder and CEO of innovation agency Redscout. "With its own lingo, menus and services, Starbucks didn’t set out to create and market a chain of coffee cafes. They focused on creating a lifestyle experience with the much-heralded 'third space.'" In some ways, says Disend, Starbucks represents a brand that uses innovation as marketing. "They invest in products and brands that have a life outside their cafés—La Boulange (the bakery business acquired in 2012) still has its own standalone bakeries, (juice brand) Evolution is available at Whole Foods—and then also drive people back into Starbucks while paying back to their core brand."
Of course, at Starbucks's scale and with its reach into new businesses, it becomes ever more difficult to maintain its original, elite position. As a new crop of coffee shops promise a more premium coffee experience, Starbucks's liquid asset itself is no longer seen by some coffee snobs as aspirational (a snippet from an Atlantic piece called "The Future Of Iced Coffee" on the rise of Blue Bottle and the prospects for artisanal coffee: "Starbucks now has a dominant, near-hegemonic position in the American specialty coffee market. All its competitors are a mere fraction of its size. And yet, many people in the coffee industry would say that Starbucks coffee is terrible, or at best, should be buried in a venti glass of hot milk").
And basing your brand on the whole experience means that experience better be smooth. "Where (the approach) falls down is execution," says Disend. "We’ve all been at a Starbucks where you don’t get the service you’re expecting. That breaks the brand’s promise. When you rely on the experience versus advertising you must ensure that experience is fulfilled. In today’s marketing world, one bad experience can spread like wildfire. And for a brand that doesn’t advertise, that could potentially be explosive."
Dunkin’ Donuts has been, historically, more of a traditional advertiser, but one that has been doing the heavy lifting to evolve with the digital, social, mobile times, to organize its efforts around a central mission, and to attract a new generations of customers. This is a brand you know from its advertising. "Time to make the donuts" is one of the most famous ad lines ever, and for the past several years, Dunkin' has operated under another massively recognizable slogan, "America Runs On Dunkin.'" Working with longtime agency of record Hill Holliday, DD has created countless high profile ads but in recent years has added a mix of creative social, CRM and mobile efforts that have kept the 64-year-old brand vibrant, and fans engaged.
The brand has become known as a particularly involved social marketer. A continuous stream of audience-inclusive efforts have included the "create Dunkin's next donut" social media contest a few years back, and the integrated #mydunkin campaign that launched in 2013. That campaign encouraged fans to share via social media how Dunkin' keeps them running, with the most enthusiastic fans chosen to appear in Dunkin' ads. DD also gained noticed for being among the first to do Vine-based TV ads—the earliest effort appearing on ESPN during Monday Night Football. The company has experimented with mobile advertising—including an ad that allowed users to customize a beverage—and has had overall success in the mobile space with payment and loyalty programs. DD followed Starbucks into the mobile payment space, but its app, launched in 2012, had customer-friendly extras—like allowing users to send gift cards to friends.
And, of course, what better measure of success than to play a role in a pop culture moment, as DD did with the hilarious Beyonce parody "Dunkin' Love (which even shouts out to the brand's iced coffee and features its Box O' Joe prominently).
"More than ever, Dunkin' is a brand that listens to its guests, through multiple channels, at all levels of the organization," says Chris D'Amico, SVP group creative director on Dunkin' Donuts at Hill Holliday. "(The brand) wants to hear (fans') stories, retell them, and genuinely interact with them." Summing up the brand's approach and how it's evolved in the last decade, D'Amico says "I'd say they're very focused on the conversations and relationships (they're) having and building with their fans and guests, and leveraging those."
As the company has grown and diversified, and as it communicates across a growing number of platforms, Dunkin's John Costello has emphasized simplicity of mission. The "America Runs" platform, according to the agency, has become a unifying statement of purpose. Costello himself has boiled down the DD purpose as remaining a place where "everyday folks who keep America running keep themselves running every day."
Starbucks, unsurprisingly, has long matched its bigger retail footprint with a much larger social media presence than its rival. Dunkin’ Donuts has just over 12 million Facebook fans and 697,000 Twitter followers. Starbucks has just over 37 million Facebook fans and 6.53 million Twitter followers. Starbucks's social success is, of course, tied to its experiential marketing approach, and perhaps not only the passion but the nature of its customers—a 2013 analysis from TrueLens compared social data from the two coffee kings and reported that DD drinkers tended to be "social moms, sports fanatics, family travelers," while Starbucks drinkers were "college age, early adopters, music enthusiasts." (the same report showed that DD drinkers were much more likely to talk about Starbucks on social media than the other way around). But Dunkin' has put serious muscle behind its social media efforts over the last few years. It's grown its followings significantly, and seems to punch above its weight in terms of engagement. While it doesn't win on sheer quantity, a number of analyses of fast food brands—like this one which puts DD number two behind McDonald's in terms of Facebook engagement—give the pink and orange an edge when it comes to quality.
"Dunkin’ puts its fans at the center of its social media strategy—they’re an active and passionate tribe that’s fueled by interactions with the brand," says Mike Proulx, EVP, Director of Social Media at Hill Holliday. "There’s a real sense of authenticity behind Dunkin’s social media 'curtain' as community management is directly handled by members of Dunkin's brand team. We’re constantly optimizing our social programs based on fan feedback and honestly approach social media as a two-way street—a chance to directly connect with our most loyal customers. We also believe that all media is social media and are always pushing the boundaries of media whether it’s putting the first branded Vine on TV or creating an entire second screen social TV program from our Top Chef integration, we are always developing innovative ways to interact with our fans." (at time of writing, Dunkin's top Facebook post was a photo of a Dunkin' t-shirt that says "Friends don't let friends drink Starbucks").
1984: It's Time To Make The Donuts
2006: Dunkin’ Donuts debuts an "America Runs on Dunkin’"-themed print, broadcast and online campaign designed to reposition the brand as an alternative to specialty coffee shops like Starbucks. John Goodman, famed for representing the average Joe, narrates the commercials.
2007: Tapping into the power of celebrity, Dunkin' Donuts casts Ace Frehley in a spot directed by Zach Braff. (Naomi Campbell appeared in another Dunkin' Donuts spot helmed by Braff, but that one was for tea.) The KISS guitarist—in full hair and makeup—shows up at a meeting and fails to deliver the profit and loss statement required by his boss, but he does play a wicked guitar solo. He cuts it as a rock star but no so much as an everyday office employee.
2009: Dunkin’ Donuts spends $100 million to launch an inspirational—and humorous—"You Kin’ Do It" integrated advertising campaign that shows everyday Americans tackling seemingly impossible tasks like shoveling out a driveway buried in snow, processing mountains of paperwork and putting together a children’s swing set by sundown fueled by Dunkin’ Donuts fresh ground coffee, of course.
2012: Dunkin’ Donuts releases its first mobile app, Dunkin’ App, which allows customers the convenience of paying for their purchases in the store with their iOS and Android smartphones and the ability to send Dunkin’ Donuts gift cards. A few months after the app came out, Dunkin' Donuts fine-tuned it, making it capable of offering users location-based, in-app discounts and other special offers.
2013: Dunkin’ Donuts brings its fans into the marketing mix, finding Dunkin’ Donuts loyalists on Facebook and Twitter and featuring them in a #mydunkin campaign that has them sharing how Dunkin’ Donuts coffee keeps them running throughout the day. Their stories were shared via TV, radio, out-of-home, mobile, social, online and in-store.
2013: Dunkin’ Donuts debuts the first-ever Vine ad for television during ESPN’s Monday Night Countdown. The adorable ad finds a hot Dunkin’ Donuts coffee and an iced Dunkin’ Donuts coffee engaging in a coin toss on a football field with a Dunkin’ Donuts latte acting as referee. Dunkin’ Donuts releases four more football-themed Vine videos that run during ESPN's Monday Night Football and find the brand’s drinks reenacting big plays.
2013: Dunkin' partners with Bravo series Top Chef for a broadcast-integrated second screen initiative. The brand was integrated into the show's quickfire challenge and Dunkin' executive chef Stan Frankenthaler also hosted the brand's first ever Google+ Hangout ahead of the show. Six fans who were chosen from a recipe contest hosted across social media channels participated in the #DDTopChef Recipe Challenge.
2014: Dunkin' Donuts dives into Discovery Channel's Shark Week by creating a Shark Bite donut that resembles a tasty little life preserver and selling it in a select number of Dunkin' Donuts stores. Fans who take a bite out of their favorite Dunkin' Donuts breakfast item and post a picture on Twitter or Instagram with the hashtag #DDSharkWeek can win prizes. Additionally, the brand tweaks its logo and tagline for the Shark Week homepage—while the logo looks like a shark took a bite out of it, "America Runs on Dunkin' " becomes "Shark Week Runs on Dunkin'."
The brand also created an interactive experience for Shark Week fans watching the programming through their Xbox One. Designed by Hill Holliday, the interactive experience provided a second-screen experience that included a live feed of #SharkWeek social content, interactive quizzes and real-time polls. In a press release for the effort, Jamie Scheu, vice president/director of experience design at Hill Holliday said, "This is the first time a paid advertiser has created an interactive experience like this for live television programming via the Xbox One."
1997: Starbucks CEO Howard Schultz says in his book, Pour Your Heart Into It: How Starbucks Built A Company One Cup At A Time: "In this ever-changing society, the most powerful and enduring brands are built from the heart. Their foundations are stronger because they are built with the strength of the human spirit, not an ad campaign."
2004: Starbucks ramps up its music efforts by launching an in-store music burning service and joins with Concord Records to sell and market the release of a Ray Charles CD called "Genius Loves Company." The record went on to win eight Grammys, including Best Album.
2004: In perhaps its finest TV ad moment, in support of its Double Shot Espresso canned drink, Starbucks taps the band Survivor to reinterpret "Eye Of The Tiger" as a motivational anthem for office worker, Glen.
2005: As part of its regional Red Cup holiday advertising campaign, Starbucks pulled a prank, affixing coffee cups to cabs in Boston and elsewhere, making it appear as though someone had placed the Starbucks beverage on the roof of the vehicles then forgot about them.
2006: Starbucks enters into a pact with the William Morris Agency that has the talent agency scouting for music, film and book projects for the coffee brand to market and distribute in its stores. "While we are a coffee company at heart, Starbucks provides much more than the best cup of coffee—we offer a community gathering place where people come together to connect and discover new things," said Starbucks's Schultz in a press release announcing the deal.
2007: When store traffic slowed, Starbucks, which previously had dismissed the idea of touting its beverages on television, launched its first national television advertising campaign made up of three cute "Pass the Cheer"-themed animated ads. In one of the spots, a man riding a chairlift shares a coffee with a reindeer.
2008: Starbucks seeks customer input through a website called My Starbucks Idea. Fans of the brand have suggested everything from linking coffee purchases to a tree-planting to program to creating reusable mugs embedded with Starbucks cards, and Starbucks not only listens, the brand puts the Ideas in Action.
2008: Starbucks promises a free cup of coffee to those who voted in that year's presidential election (a move that probably violated election law). The company promoted the effort with a TV spot that ran during a Saturday Night Live presidential election special on NBC.
2009: Starbucks uses its Twitter channel to get its fans out and about scouting for advertising posters placed in major cities across the country. Fans who find and snap pics of the posters and then post them to Twitter with the appropriate hashtag can win Starbucks gift cards.
2011: Starbucks starts accepting payments through a mobile app that has a Starbucks card stored within—mobile transactions exceed 26 million in the first year. Always innovating on the digital front, Starbucks updated the Starbucks for iPhone App with new functionality in 2013, including a digital tipping feature making it possible for customers to use Starbucks Card Mobile to tip their baristas as well as a handy shake-to-pay option that simplifies mobile payments by allowing customers quick access to their Starbucks Card by shaking their mobile device.
2011: The Starbucks Cup Magic augmented reality app allows customers to make holiday characters come to life by scanning Starbucks red cups as well as holiday coffee bags and store signage. According to Starbucks, the app had an engagement rate of 91% with more than 450,000 visits to the experience. "2011 was a year of great mobile exploration and expansion for Starbucks and an opportunity to give our customers a new way to connect with Starbucks through a variety of mobile experiences," said Adam Brotman, senior vice president and general manager of Starbucks Digital Ventures in statement.
2012: Starbucks announces that it has partnered with Square for mobile payments and invested $25 million in the then three-year-old payments startup. The company announced that Square software would eventually process all credit and debit transactions at 7,000 of its U.S. stores. "They’re focused with a level of intensity on the customer experience," Starbucks's Shultz said at the time. The rollout of the service in stores wasn't quite seamless.
2013: Seeking to differentiate itself as a purveyor of premium coffee beans, Starbucks once again turns to television, releases an ad that drives home the message, "Just having arabica coffee is not enough, the bean matters. The bean matters because you cannot roast in quality, you cannot roast in complexity." While the ad aired on television as well as in movie theaters, print ads pushing the same message could be found in The New York Times and The Wall Street Journal among other publications.
2014: Starbucks launches a Tweet-a-Coffee. Anyone with a Starbucks Card linked to their Twitter account could buy a coffee via a $5 gift card for anyone else on Twitter by simply tweeting @tweetacoffee along with the person’s Twitter handle.
2014: Starbucks shows its support for the LGBTQ community by flying a huge rainbow flag atop its Seattle headquarters in June to coincide with Seattle’s Pride Parade. Starbucks has long been a supporter of equal rights. Just last year, a group called for a boycott of the company due to its support of marriage equality. But Starbucks chairman Schultz stood firm telling attendees of a shareholders meeting, "We employ over 200,000 people in this company, and we want to embrace diversity of all kinds."
2014: Starbucks will test mobile trucks on college campuses in the coming weeks, serving coffee and snacks from the vehicles at Arizona State University, James Madison University and Coastal Caroline University. The mobile trucks will move around to various locations on each campus throughout the day, according to a press release issued by Starbucks, and some of the trucks will stay open later than college dining halls.